I’m Neal Frankle, Certified Financial Planner™. Credit problems are a serious business. In fact they changed my entire family life when I was 16. This site is here to help you repair your credit without getting ripped off. Read my story.

Get Out Of Debt Action Plan

If you follow the steps I’m about to lay out for you, I can promise that in the worst case, your situation will be vastly improved and in many cases, you will find yourself debt-free in much shorter time than you now think possible.

The specific steps we’re going to cover are:

Thorough debt self-assessment.

In this step, I’m going to give you tools you need to determine exactly what the problem that is creating (has created) your debt problem.

Hint – you may be surprised by what you learn.

Cash flow turn-around.

If you feel like you never have enough money to quite get through the month, this step will help you change all that and much more.

Get rid of lingering debt.

Even if you have a positive cash flow it still might be difficult to get rid of your existing debt.

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This step will give you what you need to solve that problem much faster than you think possible.

Stay out of debt – for good.

It’s great to turn your cash flow around and get out of debt, but the trick is not to fall back into debt ever again.

This step will show you a few easy hacks to implement to do just that.

Use your credit score to reduce costs.

Once you’ve cleaned up your finances it’s time to turn your attention to your credit score.

Many people who have struggled with debt in the past suffer the consequences long after they have cleaned up the problems because their credit score is in the basement.

This final step tells you how to clean up your credit report and boost your credit score to take advantage of the lowest possible credit costs going forward.

I do have one piece of advice before we get started; complete one step before advancing to the next and approach this process methodically.

Don’t skip around or ignore any of the steps. Do them in the order presented – they are there for a reason and by design.

Prior To Takeoff

Getting out of debt and turning your financial situation around is much easier to do if you break it down into a step-by-step process and that’s what this white paper has done for you.

But I do need to make one thing clear; even though this is really not that hard it does require effort.

Yes, certain steps are easy to take but others require more dedication.

If your numbers don’t support each other, it means either you spent a lot on a house, a car, some other major project or it means you are not doing your calculations correctly.

If you add to your debt or withdraw from savings or investments over the year (on average) it probably means you are running a negative cash flow friend. Go back and figure out what the problem is before going on.

B. Existing (Legacy) Debt Evaluation

Whether or not you have a positive or negative cash flow, we need to assemble information on your outstanding debts.

Please make a table that shows:

Lender

Amount Owed

Original Date

Interest Rate

Actual Monthly Payment

Minimum Monthly Payment

Here’s an example of what your chart might look like:

We’re going to use this schedule later to build your plan to be debt free so please don’t skip this step.

Take a few minutes to create your debt schedule now.

Step 1: Debt Self Assessment Summary

If you currently have a negative cash flow, your situation requires immediate and massive action.

Your boat is sinking Pilgrim. We’ve got to plug those holes before we go down with the ship.

We are going to solve that problem in step 2. Please do that before doing anything else.

If you have a positive cash flow (or breakeven) but have old debt, that situation is much less dire but still requires your attention and energy.

We need to get you to the next level by getting rid of that debt once and for all. We’ll cover that in step 3.

Step 2: Turning Negative Cash Flow Into Positive Cash Flow

There are two effective ways to reverse your cash flow problem; earn more and/or spend less.

Duh. You already knew that.

But which of these two do you focus on first?

It is very important to answer that question because you want to spend your time and energy where it counts most.

The thing is, there is no formula I can give you which tells you which side of the equation you need to focus on first but there are a few good rules of thumb that should help quite a bit.

Here’s what I’d like you to do.

Go through everything you spent money on for the last several months – and I mean everything.

Review the details.

How much of it was required spending (rent, food, utilities, gas, etc) and how much was discretionary (eating out, travel, vacation, jewelry, gifts etc).

Go through your entire spending for the last 2 or 3 months until you see a pattern.

Let’s use an example to illustrate.

Let’s say that I spend $1,000 a month more than I have coming in on average (calculated in Step 1 above).

And let’s say that after I review the spending details, I discover that I spend $1200 a month on average on junk I really don’t need to spend money on.

That being the case, I think my solution is right there staring me in the face. I need to cut out that needless spending. Agreed?

On the other hand, lets say I have that same $1,000 a month negative cash flow but I run a tight ship and I only spend $50 on eating out, recreation etc.

If that’s my situation, my spending isn’t the problem and I should focus on earning more.

The cool news is, you can get this done much faster than you may think possible and all you have to do to achieve these wonderful results is follow a proven track once you’ve created your debt schedule in Step 1 point B above:

Refinance your debt

Many people get complacent when it comes to high interest rates that creditors charge.

In fact, the entire credit card industry is counting on this.

But don’t fall into your trap.There are three ways to refinance your debt:

Take advantage of low-cost (or zero cost) offers from other credit card companies.

Many credit cards will refinance your high cost credit card debt with zero percent balance transfers for a year or 18 months.

Take advantage of that to drive down your cost of current debt.

Get your family and friends to refinance your high cost debt by offering them higher interest than they can get in the bank – but much lower than what you currently pay.

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